Financial Supervision Puts Head in Sand

The Financial Supervisor has today made a statement that the banks are doing very well, but the risks are apparent in the system because of banking exposure to record high equity values and to a real estate boom. That was quite a prediction that surely requires some action of her part!

The lady in charge did not mention the reasons for the bank’s great results nor for the record equity values or the real estate boom, but we all know where the cash came from! It came from generous cash payments by the European Central Bank to the banks and from the Finnish government in the form of huge Covid support.

Obviously if she had been up to the job she would have demanded that bank bonuses, and banking dividends should be held back and kept as a reserve to cover the risks which she is now calling!

But in July this year, they decided to allow banks to stop the limits on the distribution of credit institutions’ profits beyond 30 September 2021.

Why is this happening, why are they just walking away from taking necessary action? If you are making predictions about the future that are seriously risky then surely action is required now, not an easing of regulation!

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